Regulators Criticized for Withholding Bank Y2K Ratings from Public

Yahoo Y2K News
WILLIAMSBURG, Va., June 4 /PRNewswire/ -- Banking regulators are doing a grave disservice to millions of Americans by refusing to release the results of their Y2K examination of banks and thrift institutions, according to Richard Torrenzano, chairman and chief executive officer of New York City-based corporate communications and crisis counseling firm, The Torrenzano Group, Ltd.

In remarks made at the Conference of State Bank Supervisors Annual Meeting today, Torrenzano, a former member of the management committee and chief spokesperson at the New York Stock Exchange, criticized regulators for refusing to make public its examinations of bank Y2K readiness. The conference, held in Williamsburg, Virginia, was attended by more than 500 top bank executives and regulators.

``Only 3.2 percent of the more than 10,000 insured banks were rated 'Needs Improvement' or 'Unsatisfactory,''' said Torrenzano. ``And that's great -- unless your money is in a bank that falls in that 3.2 percent.

``As a depositor, I want to know whether or not my bank has been rated satisfactory and I want to know now,'' said Torrenzano. ``The money I have in the bank is there because I don't want to gamble with it, even though the odds are 97 to 3 in my favor. And shareholders also have the right to know how their banks have been rated. They are the owners of the bank. They have invested in these bank stocks with the expectation that sound management practices will result in continued dividends and increased stock value. I wouldn't exactly call getting a sub-par Y2K rating sound management. If this is the case, the owners must be told,'' he said.

Torrenzano noted that the Federal Deposit Insurance Corporation (FDIC) allows banks to publish their Community Reinvestment Act ratings and the agency also should allow banks to disclose their Y2K ratings. He called on regulators to issue a ``Seal of Approval'' to banks rated ``Satisfactory'' for their Y2K preparations.

Torrenzano did give credit to regulators and banks across the nation for the amount of information generally disseminated on Y2K, but said the public will not be confident of their readiness without the credibility established by a ``Seal of Approval.''

He cited a recent study by Wirthlin Worldwide, a respected public opinion research firm, that noted public skepticism on the Y2K readiness of banks. According to the study, three-quarters of respondents said they feel there will be some or a lot of financial records mixed up as a result of the Y2K problem. Forty-two percent said they will withdraw extra money from their bank accounts and 11 percent said they will close out their bank accounts.

Torrenzano challenged the regulators in the room to take a leadership role in communicating the Y2K message and not to dump the problem of reassuring the public entirely in the laps of the banks.

``The ''Seal of Approval doesn't have to be a guarantee, just a public statement that gives reasonable assurance that the proper steps were taken by a particular bank on Y2K,`` he said.

Regardless of whether the banks are prepared operationally for Y2K, they still have much to do, Torrenzano told the conference. He encouraged the bankers to continue communicating to their customers, stockholders and other constituents about the steps taken to prepare their computer systems for the new millennium. He also urged the audience to prepare in advance for everything that could go wrong, what he described as the ``what ifs.'' He said that customers must be assured that no matter what happens, banks have contingency plans in place to address Y2K problems.

Why worry about disclosure? We'll have all the information that we
need in 8-9 months....those banks (and other financial entities) still
in business at the end of February, 2000 will probably be compliant!